Wednesday, September 11, 2013

Net Worth Update - August 2013

While cash flow is more important when it comes to financial independence, it's still good to look at the balance sheet too, which is why I provide these net worth updates.  The S&P 500 was down a little over 4% for the month of August which pushed the value of my investments down; however, thanks to my highest monthly income and a great savings rates I was able to counter the negative pull from market fluctuations.  It was a bit of a let down that my net worth didn't increase more considering I had my highest monthly savings total as well but that's what happens when you have more and more of your net worth tied to the markets.  I had a little over $1,800 in combined 401k contributions, $1,320 in ESPP withholdings, and over $9,800 in after tax savings from my income.  The rest of the change was due to market changes and dividends.

Current Assets: $277,614.13
Curent Liquid Assets: $154,395.28
Current Debts: -$16,975.43
Net Worth: $260,638.70

I did all that I could do to try and increase my net worth even more than July, but the markets conspired against me.  Normally this wouldn't be a problem because it means that there's more buying opportunities present but I wasn't able to capitalize on the down month other than some very small purchases.  August's increase came in at $4,697.59 and was good for a 1.84% increase from July's tally.  I can now mark off my goal of a $100k increase in my net worth for the year as my total increase in 2013 is up to $104,686.52.  I had revised my goal higher at the half way point of the year to reach $286,000 for my net worth by the end of 2013 so I'm still short of that goal for now and will have to average over $6,300 in monthly increases to hit that mark.  My budget will be completely changing now that the house purchase has been completed so I went with a bit more conservative of a revised goal.  In last month's update I asked whether I should include our house in our net worth figures and I've decided to do just that but will also keep track of my liquid net worth as well.


My after-tax savings rate for August ended up at 86.60% which is just amazing.  Most of that is due to the income being so high and even better to get it back on track after July dipped down below 80%.  I'm now averaging 82.70% through the August which is phenomenal.  This is currently ahead of my 80%+ savings rate goal.  This is only savings from my net income that actually hits my checking account.  However, I do have another 8% after tax being withheld to purchase shares through the employee stock purchase plan provided by my employer.  I'm expecting a dip in my savings rate for the rest of this year due to the added expenses for the house so the 80%+ level might be in jeopardy.  Even if it dips down to the 70% range I'll still be doing just fine as that's well above what most Americans are saving.


My non-retirement accounts net worth could cover 8.64 years of expenses based on my spending from August.  This added 0.15 years, or 1.80 months, that I could afford to live without any income sources.  This number will take a hit when all of the house and furniture expenses are accounted for.  We'll have to see when they all start rolling in, but I know the first mortgage payment won't be due until November.  I'll be glad when all of the expenses are in so I can start taking steps toward getting rid of the furniture related debt and then focus on doing what I do best by saving a large amount of my income and investing it into dividend growth companies.

I've updated my Progress page to reflect August's changes.

How was your August?  Did you do better or worse than you expected this month?  

6 comments:

  1. I want to one day grow up and be like you. lol

    Great Post and blog. Keep it up.

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    Replies
    1. FFDividend,

      Thanks for the compliments. As long as this isn't turning into a Single White Female type situation.

      I'll be checking out your blog over the next few days. I love getting comments from new bloggers because it helps to inspire me to continue to push on and hopefully inspire others.

      Thanks for stopping by!

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  2. "While cash flow is more important when it comes to financial independence, it's still good to look at the balance sheet too"

    I completely agree with this. I think way too many income investors ignore networth because to them its all about the cash flow. You do not have to make it your strategy goal but I just don't get ignoring networth completely.

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    Replies
    1. PMU,

      I've noticed so often that for most DGI/FI/ER folks it's all about the cash flow, which it should be, but to me the balance sheet is just as important as gives an idea of the risk involved. Say I have some rental properties and am mortgaged up to my neck in debt but have plenty of rental income to cover the rental expenses plus my own expenses. That's great! But what if something happens to all my rentals and for whatever reason I can't rent them anymore, or not for the same price. Area went bad, a big business/employer in the area left town or any other reason. Now I'm stuck with trying to still cover the mortgage payments but have less income coming in or none at all. Th e cash flow just doesn't give enough of a full picture. Just like with analyzing a company, you're not going to look at the income statement, cash flow statement, or balance sheet alone, you'll look at all of them in tandem with each other. Same thing with personal finance if you want to get the full picture.

      Just my thoughts.

      Thanks for stopping by!

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  3. Wow - we are currently hitting about 50% saving of net income and were happy until I read this. 80%+ is phenomenal. Time to increase my income I guess... :)

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    Replies
    1. Money Stepper,

      50% is still amazing and nothing to beat yourself up about. Congrats on that! Everyone's situation is different so comparing straight up doesn't really give fair comparisons. If you were married with kids and a house then that's a big difference from my situation of married no kids and renting. Although now we have the house and all of it's related expenses so the savings rate will tick down some.

      It's always good to increase your income! Especially when you know you can drop most of it to the bottom line and to savings.

      Thanks for stopping by!

      Delete